Accounting Question

Consider your current company, or a company that you have previously worked for, and describe and critique how financial statement analysis could be used for that organization. If you do not have relevant work experience, use the GCU Library to locate an article on financial statement analysis and compare the processes recommended by the article to those in the textbook. Your initial post should be approximately 250 words. To participate in follow up discussion, ask questions and post comments regarding classmates’ posts, or respond to follow-up questions posted by the instructor.

Please include proper citations in your discussion post. Points will be deducted if proper citations are not used.

Alisha Brand

Mar 28, 2024, 12:17 PM

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Greetings Professor and Classmates,

Financial statement analysis is mainly used for performance evaluation towards any company’s financial statement. A financial statement analysis is also used to help insure that successful decisions are being done properly. Financial statements and balance sheets are essential tools for managers to identify areas of cost escalating or inefficiencies, such as procurement or production processes. They provide information on current assets and liabilities, working capital ratios, and profitability of supply chain operations. These metrics offer insights into the profitability of producing and selling goods or services, considering both direct and indirect costs. However, financial analysis has limitations, such as not accurately reflecting future performance in rapidly changing industries like retail. Accounting practices and choices can distort financial ratios, making comparisons challenging. Additionally, external factors like economic conditions and consumer preferences can significantly impact the furniture retail industry, complicating the interpretation of financial metrics. To gain a comprehensive understanding of supply chain efficiency and effectiveness, financial statement analysis should be conducted regularly and in conjunction with other management tools. Comparing a company’s financial statements to those of other companies in the same industry or comparing financial statements from previous periods can help identify trends and changes in the company’s financial performance. The company that I use to work for did a lot of the financial work at the district level. At the store level, I really only seen the basics of the financial statements which were the differing documents to go towards the districts financial statement for the end of that fiscal year. Financial statement analysis could be used to help better the company’s perspective on what they allow their stores to contribute towards their statements. If they have more reasonable things that they know for sure is considered important to the financial statement, then they could limit the other access paperwork that usually gets thrown out and compile the paperwork that is needed onto one sheet.

Alisha Brand

Reference

Davis, C., & Davis, E. (2020). Managerial Accounting. Wiley.

https://read.wiley.com/books/9781119577638/page/23/s

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